Insurance players engage investigators to counter fraud

The insurance industry is increasingly turning to investigators to counter the growing threat of fraud, Insurance Association of Malawi president Grant Mwenechanya has said.

In an emailed response to a questionnaire, Mwenechanya said although it is difficult to quantify bogus claims, the sector is registering more fraudulent claims ranging from mere exaggeration, minor and invisible dents to falsifying cause or scene of accidents.

“The industry is forced now to examine claims with an eagle’s eye and investigate most of the claims it receives. Investigators are being used more and more frequently than before,” he said.

Mwenechanya, however, said that due to the processes involved, conclusions of most claims are being delayed, which breeds misunderstandings between insurers and their clients.

“It is a given fact that where two parties enter into a contract sometimes there are some misunderstandings. One thing you should know is that insurance is quite technical and sometimes there are various misunderstandings just like any other contract where two parties enter into,” he said.

The Reserve Bank of Malawi (RBM)—which regulates the sector—conceded that while they periodically receive complaints from the public arising from misunderstandings between insurers and their clients, if left unchecked, the differences may breed an environment of mistrust and negative perception towards the industry.

“As regulators, we periodically receive complaints from the public arising from misunderstandings between insurers and their clients. These are dealt with by the Consumer Protection Division within the RBM.

“The complaints are also taken as a feedback mechanism to help us design regulation that will assist the industry to thrive and operate in a safe manner. As an example of this, the Registrar of Financial Institutions issued a directive on claims management in 2015 which addresses challenges associated with settlement of claims, which is one of the major complaints that we receive,” said Mbane Ngwira, RBM spokesperson.

He added: “Misunderstandings between insurers and their clients can breed an environment of lack of trust, negative perception of insurance business and loss of confidence in insurance by the insured public and potential customers. These factors may frustrate efforts towards increasing insurance penetration.”